Employment News and Comment

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TUPE and early retirement benefits: no smiling pensioners allowed

While the TUPE Regulations 2006 make it clear that obligations in respect of old age benefits (such as ordinary pension rights) do not pass to the transferee when there has been a relevant transfer, the question as to the extent to which some particular entitlements may be said to fall outside of that definition has remained a vexed question despite two ECJ judgments. The High Court's recent judgment in The Procter & Gamble Company v Svenska Cellulosa Aktiebolaget SCA and anor [2012] EWHC 1257 (Ch) brings some pragmatism to the issue domestically, while leaving some questions unanswered.

The Business Transfers Directive 2001/23/EC provides, at art 3(4), that the provisions of the Directive concerned with the transfer of employment do not apply ‘in relation to employees' rights to old age, invalidity or survivors' benefits under supplementary company or inter-company pension schemes'.

Domestically, reg 10 of the TUPE Regulations 2006 stipulates that regs 4 and 5 (providing for the transfer of contracts of employment and collective agreements) will not apply ‘to so much of a contract of employment or collective agreement as relates to an occupational pension scheme within the meaning of the Pensions Schemes Act 1993' or ‘to any rights, powers, duties or liabilities under or in connection with any such contract or subsisting by virtue of any such agreement'. It goes on to set out an exclusion, to the effect that TUPE will still apply to transfer ‘any provisions of an occupational pension scheme which do not relate to benefits to old age, invalidity or survivors' shall not be treated as being part of the scheme.'